MUMBAI: The Banans, the founding promoters of Delhi-based restaurant chain Sagar Ratna, have offered to purchase the 75 per cent stake of India Equity Partners stake for Rs 135 crore, two people with direct knowledge of the development said.

The offer by the promoters, who have been battling India Equity Partners for the past 18 months, is at a 25 per cent discount to the Rs 180 crore the PE fund invested to purchase the stake in 2011.

"We have been observing that the business has been receding on many counts, including quality, customer satisfaction, franchisee satisfaction, profitability and growth of the business," Roshan Banan, son of the founder Jayaram Banan, said in a letter to the fund and its investors (known as limited partners in industry parlance).

"The revenue of the company has dipped considerably." ET has reviewed the letter written on August 23.

In a telephonic interview on Tuesday, the promoters acknowledged the offer they made to India Equity Partners.

Sagar Ratna, which opened in first branch in New Delhi's Defence Colony in 1986, now owns 65 restaurants in Haryana, Himachal Pradesh, Punjab, Rajasthan and Uttar Pradesh. It also has around 35 franchisees.

"The promoters, along with a financial investor, are planning to buy back the stake," said one of those with direct knowledge of the matter.

The letter added: "In view of the foregoing, we give you an offer to sell the shareholding in Sagar Ratna Restaurants to us, as we feel we can bring about all the required improvement in the business and also bring back the lost strength to the brand. We are ready to pay Rs 135 crore for buying out all the shareholders except us in the company."

IEP, after taking control, has been trying to restructure the business with the Banans taking a backseat. Both sides have accused each other of violating the share purchase agreement.

The promoters said the fund had destroyed the brand and value.

The fund is said to have accused the promoter of violating their contract by starting a hotel chain under the Sri Ratnam brand. "This is in breach of the non-compete agreement and it is being done through related party entity and not directly," said one of those cited above.

IEP has filed police complaints and court cases against the promoters for misconduct and making threats. An India Equity Partners spokesperson declined to comment.

Differences between PE funds and promoters of investee companies have been increasingly cropping up as revenue drops in a slowing economy. Last month, IEP along with General Atlantic dragged the promoters of Fourcee Infrastructure Equipment to the Company Law Board in Mumbai for alleged fraud and misappropriation of accounts.

Earlier this year, IEP ordered a special audit of all the branches of South-India based gold loan lender Manappuram Finance saying its branch network was being used to cross sell other services of the promoter group. "In many cases, where the fund cycle is coming to an end, the funds will look at finding exits. The tiffs between promoters and funds are expected to rise, especially where funds are in a minority position," said Avinash Gupta, head, financial services advisory at Deloitte Touche Tohmatsu India.